Gold prices find footing after 3-session drop

SAN FRANCISCO (MarketWatch) — Gold futures finished with a slight gain Monday, finding their footing after declines over the past three trading sessions as weakness in global equities and concerns over the automatic U.S. spending cuts buoyed safe-haven buying of the precious metal.

The market also looked to key events this week expected to give gold a better sense of direction, including meetings by the Bank of England and European Central Bank.

Gold for delivery in April rose 10 cents to settled at $1,572.40 an ounce on the Comex division of the New York Mercantile Exchange. Prices had touched a low of $1,569.70 after climbing as high as $1,584.30.

Strong U.S. economic data, a recovering Chinese economy and quiet in the euro zone were among the drivers of gold’s fall last month, said Jan Skoyles, head of research at The Real Asset Co.

“It is these same factors which are now providing support to the gold price: unrest in Italy’s political world, further bailout talks in Greece, the sequestration [automatic budget cuts] in the U.S. and weaker-than-expected data from China’s services industry have now reminded investors that this crisis still has a long way to run,” she said.

And this week, “the markets will be looking towards the central-bank meetings on Thursday, and of course the [U.S.] employment report on Friday,” Skoyles said. “Until we know more on these then I suspect gold will trade sideways.”

The European Central Bank and Bank of England will separately issue their decisions on monetary policy Thursday, while U.S. data Friday is expected to show an uptick in nonfarm payrolls. See: U.S. Economic Calendar.Also see: Global Calendar.

“I suspect many know that no matter the number on the U.S.’s employment figures on Friday, it will not be enough for the [Federal Reserve] and so we can expect QE to continue,” said Skoyles.

Gold fell $5.80, or 0.4%, to settle at $1,572.30 an ounce on Friday for the lowest settlement for a most-active contract since July 18.

By Friday’s close, prices had tallied a three-session drop of more than $43 an ounce, or 2.7%. Read: Gold down a third day, at lowest since mid-July.

Gains for the U.S. dollar have dampened gold’s appeal to holders of non-U.S. currencies, and the ICE dollar index traded at 82.272, up a bit from 82.265 in late North American trading on Friday.

On Friday, the Commitments of Traders report “showed a 4,662 contract decrease in managed money (large speculator) shorts, the first significant reduction in spec shorts in a month and since gold traded in the $1,660s,” said Gene Arensberg, editor of the Got Gold Report.

“Managed money traders have an enormous gross short position on at the moment … which all traders know they will have to cover at some point,” he said. See The Tell: Gold ETP flows set for weakest month on record, says Barclays.

“Short covering, no matter who does it, is buying pressure. The funds have an enormous amount of pent up buying pressure,” Arensberg said.

Central bank talk

Comments from central-bank figures were in play Monday.

“This is a big week for central-bank policy, and already today we’ve had aggressively dovish noises” from the Bank of Japan’s nominee for governor, and Janet Yellen at the U.S. Federal Reserve, said Adrian Ash, head of research at BullionVault.

Haruhiko Kuroda, the Japanese government’s nominee to be the BOJ’s next governor, told lawmakers Monday that it would be difficult for the central bank to buy large quantities of foreign bonds under current international rules on currencies, according to a Reuters report.

Gold prices find footing after 3-session drop

By Myra P. Saefong

SAN FRANCISCO (MarketWatch) — Gold futures finished with a slight gain Monday, finding their footing after declines over the past three trading sessions as weakness in global equities and concerns over the automatic U.S. spending cuts buoyed safe-haven buying of the precious metal.

The market also looked to key events this week expected to give gold a better sense of direction, including meetings by the Bank of England and European Central Bank.

Gold for delivery in April rose 10 cents to settled at $1,572.40 an ounce on the Comex division of the New York Mercantile Exchange. Prices had touched a low of $1,569.70 after climbing as high as $1,584.30.

Strong U.S. economic data, a recovering Chinese economy and quiet in the euro zone were among the drivers of gold’s fall last month, said Jan Skoyles, head of research at The Real Asset Co.

“It is these same factors which are now providing support to the gold price: unrest in Italy’s political world, further bailout talks in Greece, the sequestration [automatic budget cuts] in the U.S. and weaker-than-expected data from China’s services industry have now reminded investors that this crisis still has a long way to run,” she said.

And this week, “the markets will be looking towards the central-bank meetings on Thursday, and of course the [U.S.] employment report on Friday,” Skoyles said. “Until we know more on these then I suspect gold will trade sideways.”

The European Central Bank and Bank of England will separately issue their decisions on monetary policy Thursday, while U.S. data Friday is expected to show an uptick in nonfarm payrolls. See: U.S. Economic Calendar.Also see: Global Calendar.

“I suspect many know that no matter the number on the U.S.’s employment figures on Friday, it will not be enough for the [Federal Reserve] and so we can expect QE to continue,” said Skoyles.

Gold fell $5.80, or 0.4%, to settle at $1,572.30 an ounce on Friday for the lowest settlement for a most-active contract since July 18.

By Friday’s close, prices had tallied a three-session drop of more than $43 an ounce, or 2.7%. Read: Gold down a third day, at lowest since mid-July.

Gains for the U.S. dollar have dampened gold’s appeal to holders of non-U.S. currencies, and the ICE dollar index traded at 82.272, up a bit from 82.265 in late North American trading on Friday.

On Friday, the Commitments of Traders report “showed a 4,662 contract decrease in managed money (large speculator) shorts, the first significant reduction in spec shorts in a month and since gold traded in the $1,660s,” said Gene Arensberg, editor of the Got Gold Report.

“Managed money traders have an enormous gross short position on at the moment … which all traders know they will have to cover at some point,” he said. See The Tell: Gold ETP flows set for weakest month on record, says Barclays.

“Short covering, no matter who does it, is buying pressure. The funds have an enormous amount of pent up buying pressure,” Arensberg said.

Central bank talk

Comments from central-bank figures were in play Monday.

“This is a big week for central-bank policy, and already today we’ve had aggressively dovish noises” from the Bank of Japan’s nominee for governor, and Janet Yellen at the U.S. Federal Reserve, said Adrian Ash, head of research at BullionVault.

Haruhiko Kuroda, the Japanese government’s nominee to be the BOJ’s next governor, told lawmakers Monday that it would be difficult for the central bank to buy large quantities of foreign bonds under current international rules on currencies, according to a Reuters report.